Following recent reforms in Colorado in response to revenue shortfalls caused by the new federal tax and spending law, Oregon lawmakers are considering similar action as the state faces an estimated $888 million shortfall over two years if the state fails to take action. Oregon lawmakers also continue to push for a scheduled vote during their current special session for new revenue to ensure infrastructure and public transit are funded for years to come while averting steep transportation funding cuts.
Lawmakers in other states across the country are pursuing further tax cuts. Florida lawmakers are examining how to reduce property taxes but are not currently exploring Gov. Ron DeSantis’ proposal for full elimination. Similarly, Nebraska Gov. Jim Pillen is ordering the use of $20 million in unexpected revenue to be used for property tax cuts.
Major State Tax Proposals and Developments
- Lawmakers in OREGON are weighing actions to avert an estimated $888 million revenue loss over the next two years. This revenue is at stake given the way in which the state’s tax code automatically couples to federal tax changes that were signed into law in July. The Chairman of the Senate Committee on Finance and Revenue said lawmakers plan to discuss their options later this month since waiting until the next official legislative session in February would come too late to spare the state from steep revenue losses. – MILES TRINIDAD
- WASHINGTON state’s Office of Financial Management released a report on the state effects of the Trump administration’s “Liberation Day” tariffs should they go into full effect, predicting 16 percent price increases, 32,000 jobs put at risk, $2.2 billion in lost state revenue, and declines in economic growth of 1.2 to 1.8 percent per quarter. – DYLAN GRUNDMAN O’NEIL
State Roundup
- IDAHO Gov. Brad Little ordered all state agencies and departments, other than public schools, to cut spending by 3 percent by the end of the fiscal year. This follows an announcement that state revenues would miss forecasted projections by almost $23 million through the first two months of the new fiscal year.
- A task for in Chicago, ILLINOIS has put forth recommendations to Mayor Brandon Johnson on how to close the city’s $1 billion budget gap. Recommendations include hiking fees on garbage collection and rideshare services, increasing taxes on liquor, tying property taxes to inflation, and a hiring freeze, amongst others.
- Lt. Gov. Micah Beckwith of INDIANA has called for a moratorium on the state’s 7 percent sales tax on utilities such as electricity, gas, water, and steam as utility bills continue to increase on Hoosiers.
- Legislative leaders in FLORIDA are looking at ways to reduce property taxes but are not currently considering full elimination, as has been proposed by Gov. Ron DeSantis.
- A report by the LOUISIANA legislative auditor recommends the state reduces the fee to reinstate licenses for lapsed auto insurance coverage, which is currently higher than the fee to reinstate licenses after more serious offenses like DWIs. Insurance cancellation fees generated $103.8 million in revenue budget last year.
- MASSACHUSETTS’s recent millionaire’s tax continues to fund important investments in the state, like upgrades to Belcher Elementary school in Chicopee.
- MAINE‘s Real Estate Property Tax Relief Task Force met last week for the first time to discuss ways to lower property taxes. An interim report is expected to be released in January and a final report in late 2026.
- MINNESOTA businesses are preparing for the statewide mandatory family and medical paid leave program, which goes into effect on January 1, 2026.
- Shortly after the University of NEBRASKA announced it would have to cut more than $40 million from its budget and eliminate six entire degree programs at its flagship campus in Lincoln, Gov. Jim Pillen ordered $20 million in unexpected revenue be used for untargeted property tax cuts that will be diffused around the state and only reduce property taxes by less than 0.4 percent.
- Without further action, funding cuts in the new federal law will force NEW YORK to roll back health coverage for middle- and low-income families, resulting in about 450,000 people losing access.
- The OREGON Senate has again postponed its vote on a major transportation funding bill until September 29 as a key lawmaker remains hospitalized and the bill faces a narrow margin for passage. The bill would raise $4.3 billion for road maintenance and public transit. The legislation includes increases to the state’s gas tax (from 40 to 46 cents per gallon), increases to vehicle title and registration fees, doubling of the state’s payroll tax (from 0.1 to 0.2 percent) for the next two years, and requiring electric vehicle drivers to enroll in the state’s road usage charge program. The bill narrowly passed the House and requires three-fifths support in both chambers to pass.
What We’re Reading
- In a recent piece, Kelly Allen of the West Virginia Center on Budget & Policy lays out the impact of the federal tax bill on West Virginians. The bottom 40 percent of residents will pay more in taxes, while the wealthiest households reap the benefits. The piece emphasizes that the bill partially offsets the tax changes with devastating spending cuts—especially to Medicaid.
- The U.S. Census Bureau released its 2024 Current Population Survey, giving new insights into poverty and the programs that mitigate it for children and families. To lift up these policies, ITEP published briefs on state Child Tax Credits and Earned Income Tax Credits, as well as a blog on the updated poverty rates and policy solutions. The briefs outline recent trends and highlight the details of the policies on the books in states in 2026.
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